How Much Car Insurance Do I Need Under the New Michigan No-Fault Law?

PERSONAL INJURY PROTECTION (PIP) COVERAGE OPTIONS

Under Michigan’s No-Fault law, Personal Injury Protection (PIP) covers lost wages, replacement services and survivors benefits. Since July 1, 2020, motorists can choose how much PIP coverage they want. There are six coverage options: 

Option 1 – Unlimited PIP Medical Coverage (same as old law)

This option provides the same unlimited lifetime medical coverage that was required under the old No-Fault law. It pays for all allowable medical and related expenses for an injured person’s care, treatment, recovery and rehabilitation, including many medical expenses that are not covered by most health insurance plans. Policy holders that want to retain their previous level of medical coverage may do so by choosing this option.

Option 2 – Limited PIP Medical Coverage of $500,000

If you choose this coverage limit, your insurance company will cover up to $500,000 per person per accident in Personal Injury Protection (PIP) benefits for medical and related expenses.

Option 3 – Limited PIP Medical Coverage of $250,000

This option limits Personal Injury Protection (PIP) coverage to $250,000 per person per accident for medical and related expenses.

Option 4 – Limited PIP Medical Coverage of $250,000 with Exclusions

This option allows policy holders who choose limited coverage of $250,000 to opt out of Personal Injury Protection (PIP) medical coverage for themselves, a spouse or a resident relative. To qualify for exclusion, the person(s) must have their own qualified health care coverage – other than Medicare or Medicaid – that covers motor vehicle accident injuries. Anyone who is excluded will have no PIP medical coverage under the No-Fault policy.

Option 5 – Limited PIP Coverage of $50,000 – for Medicaid Recipients only

This option, which caps Personal Injury Protection (PIP) benefits at $50,000 per person per accident, is only available to applicants or named insureds who are enrolled in Medicaid. In addition, the insured’s spouse and any resident relatives on the policy must have their own qualified health care coverage that covers auto accident injuries. This coverage can be provided by Medicaid, private insurance or a separate No-Fault policy that includes PIP benefits.

Option 6 – No PIP Medical Coverage

This option is only available to applicants or named insureds who are covered under Medicare Parts A and B. In addition, the insured person’s spouse and any resident relatives covered by the policy must have their own qualified health care coverage that covers auto accident injuries. This includes private insurance or another auto policy with PIP medical coverage.

HOW DO I DECIDE HOW MUCH CAR INSURANCE I NEED?

There is no “one-size-fits-all” policy under Michigan’s No-Fault car insurance law. Every policy holder must weigh the pros and cons of each option to decide what is right for themselves and their families.

However, there are some things to consider about each of the various options.

Unlimited lifetime PIP medical coverage

While this option provides the most complete coverage, your premium rates are not likely to decrease. 

Limited PIP medical coverage

It’s important to know that insurance companies will not pay medical costs that exceed the policy limits. Therefore, if you or someone on your policy suffers a catastrophic injury, the resulting medical bills could be devastating. However, if you are covered under another health insurance plan, that coverage would take over after your PIP benefits were exhausted.

Complete opt-out of PIP medical coverage (for Medicare recipients or those with other qualified health care plans)

While your premium will probably be lower than before, you should know that neither Medicare nor health insurance plans provide the same coverage as unlimited lifetime PIP benefits.

With unlimited PIP benefits, all reasonable and necessary services are covered, regardless of the duration of treatment.

HOW MUCH LIABILITY (BODILY INJURY) COVERAGE DO I NEED?

Liability coverage protects motorists who cause an accident that injures or kills another person(s). As of July 1, 2020, the minimum liability limits for Michigan No-Fault policies is $50,000 per person and $100,000 per accident. However, the default amount on your new premium bill will be $250,000 per person and $500,000 per accident. You have the option of selecting greater or lesser coverage amounts as long as the minimum level of $50,000/$100,000 is met.

It is advisable to purchase as much bodily injury insurance as you can afford. In addition, you may want to talk to your insurance agent about optional “umbrella coverage” to provide additional liability protection.

HOW MUCH UNINSURED AND UNDERINSURED MOTORIST COVERAGE DO I NEED?

Uninsured and underinsured motorist coverage protects you and your family members in case of an accident caused by a driver who has zero or insufficient auto insurance.

If you are seriously injured in a car accident and the accident was caused by a driver with limited liability insurance, you could be faced with devastating medical bills. Accordingly, it’s wise to purchase as much uninsured and underinsured motorist coverage as you can comfortably afford.

WHY DOES MY NEW PREMIUM BILL SHOW THAT I HAVE UNLIMITED PIP MEDICAL COVERAGE AND $250,000/$500,000 BODILY INJURY (LIABILITY) INSURANCE?

Car insurance companies may include certain default coverage amounts on bills for renewals or new policies. If you wish to select a different option for PIP medical benefits or liability coverage, you will have to notify your insurance agent. 

CONTACT AN EXPERIENCED CAR ACCIDENT ATTORNEY TODAY

If you or a loved one is injured in an accident, call us. Our experienced and compassionate legal team is ready to fight for your rights to the compensation you deserve.

Michigan No-Fault law is complicated, but finding the right auto accident attorney is simple.

Start your case by clicking on the link below or call us today for a free, no-obligation remote consultation from the safety of your home.